- 63% of procurement leaders have rethought their approach due to new technologies
- 48% are driven by ‘fear of missing out’ (FOMO) rather than a true understanding of the digital requirement
- 72% say lack of talent to harness the power of machines is among the biggest barriers to technology delivering the expected benefits, with 66% citing poor vendor support for implementing new technologies
- 64% believe strategic suppliers will play a crucial role in helping to meet procurement objectives, yet half have not formally selected those partners
- At least 69% think companies must play their part in building truly strategic supplier relationships through longer-term commitments, early engagement and visibility of upcoming demand, but 74% say they should be able to expect transparent commercial arrangements in return
Digital procurement is driving significant activity among procurement leaders with nearly two-thirds (63%) having rethought their approach due to new technologies and nearly 78% believing it should be a boardroom priority. Much of this activity is, however, being driven by a fear of missing out (FOMO) rather than a true understanding of the digital requirement, as acknowledged by nearly half (48%) of our survey respondents.
These are some of the findings from a major new research study called, “Procurement 2025: Is digital transformation driving more effective procurement?” published by Efficio, the global procurement consultancy, in co-operation with Cranfield University.
Among the biggest barriers to technology delivering the expected benefits are lack of talent to harness the power of machines (72%), poor vendor support in implementing technologies (66%) and new technology not being supported by the right processes and skills (64%). Interestingly, the capability of current technology is the least-cited barrier to success, with only 37% of procurement leaders viewing it as a significant hurdle.
Strategic sourcing in procurement is what leads to improved product and service levels from suppliers at reduced total cost. High-performing companies manage to achieve 2-3% procurement savings on total third-party costs year on year. This can only be accomplished by accelerating and achieving more through the sourcing process and entering into more innovative sophisticated arrangements with suppliers.
Nearly two-thirds (64%) of survey respondents believe strategic suppliers will play a crucial role in helping to meet procurement objectives, yet half have not formally selected those partners. More longer-term commitments (69%), early engagement (65%) and visibility of upcoming demand (57%). Nearly three-quarters (74%) of companies think they should expect transparent commercial arrangements from strategic suppliers in return.
’The art of procurement’ is the past; the future is data-driven decision-making or the ‘science of procurement’. Our survey shows procurement professionals are trying to make the shift towards becoming more scientific in how they take decisions, but many barriers still exist. We believe that by employing the right tools and technology, paired with the correct people and processes, a complete digital transformation of procurement could make the function twice as effective.